On February 21, 2019, the MCA issued the Companies (Incorporation) Amendment Rules, 2019 which came into force from February 25. Through these rules, the MCA unleashed e-form 22 on the nation. E-form 22 has another name — e-form ACTIVE, where ACTIVE translates as Active Companies Tagging Identities and Verification.

The drop-dead deadline to file the e-form ACTIVE without any fee is April 25, after which it would cost ₹10,000 to fill the form. If the form is not filed by the deadline, the company concerned would be marked as “Active non-compliant”. The form is to be filed by companies incorporated prior to December 21, 2017. Once the ‘active non-compliant’ tag appears, companies would not be able to intimate the Registrar about change in authorised share capital, file return of allotment, providing particulars of directors and key management personnel and inform about change of registered office.

Since the e-form ACTIVE asks for only general information about the active existence of a company, most of the content would be pre-filled. Hence, companies that have not complied with the requirements of the Companies Act, 2013 on matters such as filing of financials statements and annual returns, appointment of statutory and cost auditors, having minimum number of directors or has not appointed Key Management Personnel (KMP), would have difficulties in completing the form.

Three photos

Companies that have had some experience in complying with the Companies Act would find the above requirements routine and non-problematical. And then, as is their wont, the rules pull off a surprise. The rules state that the attachments to the e-form ACTIVE would be a photograph of the registered office of the company showing the external building and inside office and also showing therein at least one director/KMP who has affixed his/her digital signature. Any other optional attachment may also be provided.

While the intention of the MCA to keep track of active, not-so-active and vanishing companies is laudable, the requirement to upload a photograph of the registered office of the company from outside, inside and with a KMP is, to say the least, bizarre. Of course, even the dormant companies would want to comply with this requirement since taking three photographs and uploading them would cost much lesser than ₹10,000.

While the expansion of the word ACTIVE has words such as tagging and identification, one is not sure how this would be done. Would the MCA seek the support of Google Maps to tag and identify registered offices of companies? What would companies do if they are in the process of shifting their registered office? Since optional attachments are permitted, companies can upload multiple photographs of their registered offices just to confuse the MCA.

The government is on a mission to get details about shell companies and vanishing companies and these forms are additional requirements towards that cause. The IL&FS issue has shown that good governance can be given a go-by in front of the regulators’ own eyes without filing in a single form.

The only manner in which the MCA can get companies to comply substantially with the provisions of the Companies Act is to implement the draconian penal provisions in the Act. Implementation of these provisions doesn’t need a form.

The writer is a chartered accountant.

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